Daniel Levine co-authored an article for the Probate and Trust Law Section of the Philadelphia Bar Association discussing the significance of estate and succession planning when establishing a small business. Those founding small businesses often neglect this step – more than 70% of family and closely held businesses lack succession plans, and many fail during ownership transitions. Life events such as retirement, death, divorce, or bankruptcy can disrupt operations, affecting relationships with lenders, employees, and customers. Without proper planning, businesses risk incurring excessive taxes, ownership disputes, and even losing control through receivership. Proactive succession and estate planning safeguard continuity, preserve value, and honor the legacy of the original owners while enabling smooth transitions that adapt to future opportunities.
Effective planning should begin at the inception of a business, influencing decisions about entity type, governance, and operating agreements. Succession plans should align with the owner’s goals and be integrated into estate plans through tools such as trusts, gifting strategies, life insurance, and buy-sell agreements. Regular updates and clear communication among stakeholders are essential. For franchised businesses, compliance with franchise agreements and early engagement with franchisors is critical to avoid unauthorized transfers or termination. Ultimately, succession and estate planning are strategic imperatives, not mere formalities, ensuring businesses thrive across generations with guidance from experienced legal and financial advisors.
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